Welfare effects of automatic‐IRAs

Erin Cottle Hunt

Contemporary Economic Policy, 2023, vol. 41, issue 2, 300-318

Abstract: Several states require employers who do not offer retirement benefits to automatically enroll their employees in individual retirement accounts (IRAs). We quantify the welfare effects of this program for individuals who follow a rule‐of‐thumb to make savings decisions. We find workers who save more than 3% would be willing to give up 0%–1.4% of lifetime consumption to avoid an IRA. We also consider a fully rational model with credit frictions, stochastic income and pre‐retirement withdrawals, and costly IRA opt‐outs. We find that being enrolled in an IRA is most likely to benefit workers who do not borrow during the life‐cycle.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/coep.12600

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:coecpo:v:41:y:2023:i:2:p:300-318

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1074-3529

Access Statistics for this article

Contemporary Economic Policy is currently edited by Brad R. Humphreys

More articles in Contemporary Economic Policy from Western Economic Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().